Jes Staley: why did the FCA investigate and are its findings public?
Jes Staley, Barclays’ chief executive for the past six years, is stepping down after City regulators shared with him and the bank preliminary findings of an investigation over how he described his links to the sex offender and disgraced financier Jeffrey Epstein.
However, Staley plans to challenge the Financial Conduct Authority (FCA) and the Bank of England’s Prudential
Regulation Authority (PRA) over their conclusions, meaning it could take much longer before the findings are released to the public.
We take a closer look at what we know about the case and its consequences so far.
What does the investigation cover?
According to Barclays, the investigation focused on the way Staley characterised his relationship with Epstein to Barclays, and how Barclays subsequently described that relationship to the FCA when asked for further information.
The FCA has not commented on the scope of the investigation, or its preliminary findings, which have been shared with Staley and Barclays but have yet to be released to the public.
What prompted the investigation?
The joint FCA and PRA inquiry was launched after emails between Staley and Epstein were handed to the UK regulators by their counterparts in the US.
Those emails were reportedly supplied by JP Morgan Chase and dated to Staley’s time at the US bank. According to the Financial Times, which first reported on the correspondence, the emails suggested their relationship was friendly. JP Morgan and Barclays have declined to comment on the emails.
“Obviously I thought I knew him well, and I didn’t,” Staley told reporters last year when the investigation was made public. “And for sure with hindsight of what we know now, I deeply regret having had any relationship with
Jeffrey Epstein.”
What do we know about Staley’s relationship with Epstein?
The American banker has said he developed a relationship with Epstein in 2000, when he was hired to lead JP Morgan’s private bank, which handles wealthy clients.
However, Staley stayed in contact with Epstein for seven years after he was convicted of soliciting prostitution from a minor in 2008, and visited Eps
tein in Florida while he was still serving his sentence and on work release in 2009.
He continued his relationship with Epstein after he left JPMorgan to join hedge fund BlueMountain Capital in 2013, but claims the relationship started to taper off after he left the bank.
The two men met for a final time in 2015, when Staley took his own yacht, the Bequia, to visit Epstein’s private Caribbean island.
Staley volunteered to explain his ties to Epstein to Barclays in summer 2019, when media reports cast a fresh spotlight on their relationship. It is still not clear why Staley decided to cut ties with his former banking client.
Epstein died in prison in August 2019 while awaiting trial on charges of sex-trafficking underage girls. A US medical examiner ruled he killed himself.
Has Staley been implicated in other controversies since joining Barclays in 2015?
Yes. Staley was personally fined almost £650,000, and ordered to repay £500,000 of his bonus, for twice attempting to unmask a whistleblower in 2016. Staley used the bank’s internal security unit to try to discover who had written letters to the board regarding a new hire at Barclays, who was also a former friend and colleague of Staley’s at JP Morgan. Staley apologised to the bank’s board after the investigation.
Later in 2017, Staley caused a rift between private equity giant KKR and Barclays after backing his brother-inlaw in a complicated legal dispute with the buyout house. While Staley argued that he was involved in a personal capacity, rather than as chief executive of Barclays, it strained the bank’s relationship with one of its longtime clients.
When will we learn more about the City regulators’ findings?
That is still unclear. The FCA usually shares preliminary findings with the subjects of its investigation about a month before releasing them to the public and issuing any potential fines or penalties.
While most companies tend to accept and settle the investigation, often resulting in smaller fines, Staley plans to contest the findings by bringing the case to the FCA’s regulatory decisions committee (RDC).
Staley could also appeal to the RDC to keep the document under wraps on privacy grounds, while the process gets under way. If he wins, and argues for privacy, it is possible that the details of the investigation are never publicly released.
It is not yet clear on which grounds Staley plans to challenge the findings. It is understood that Barclays is unlikely to cover any associated legal costs, given Staley’s resignation.
What does this mean for Barclays?
It is not clear whether Barclays is implicated in the investigation’s findings or any wrongdoing in relation to the case.
However, in the bank’s words, the inquiry not only dealt with Staley’s characterisation of the relationship with Epstein, but Barclays’ subsequent portrayal of that relationship to regulators.
Barclays has said it was “disappointed” in the outcome of the investigation, which resulted in Staley’s immediate resignation. Staley has been replaced by CS Venkatakrishnan, previously Barclays’ head of global markets.